9 things small business owners need to do before Brexit
Our 9-point checklist covering areas in which your business needs to take action to be prepared.
After a year when uncertainty over Brexit has dominated business headlines, we’re rounding off with a 9-point checklist covering areas in which your business needs to take action to be prepared.
1. Get new customs declarations ready
UK companies will have to declare goods crossing the EU border once we leave the Union. The EU currently requires 8 (!) copies of each customs declaration for non-EU members to fill out.
Small businesses will need to factor in those admin times: HMRC predicts that customs declarations that need to be filled out will quintuple, from 55 million per year at the moment to a staggering 255 million every year.
2. Become an AEO
If you’re classified as an AEO - an “Authorised Economic Operator” - your goods will get faster clearance at borders. That's likely to be invaluable after the border change in March 2019, when new regulations will likely be causing slowdowns and bottlenecks.
Unfortunately, the process to becoming an AEO is long and convoluted, and can take as long as a year. Companies that don't start the process soon will struggle to get there by 2019.
To give you an idea of how unprepared most businesses are for Brexit, consider that around 130,000 businesses will be dealing with customs for the first time ever, according to the Institute for Government think-tank.
3. Choose between higher tariffs or more bureaucracy
Many businesses will have to choose between paying EU tariffs, and filling out lengthy forms to show their goods qualify for free trade under any new, bilateral agreement.
The average EU tariff is 2.3% - excluding agriculture, which is considerably higher.
4. Relink your supply chains
The Chartered Institute of Procurement and Supply reports that 63% of EU companies are preparing to abandon UK suppliers, while 40% of UK businesses are preparing to switch to UK suppliers.
That means there’s going to be massive changes in who-gets-what-from-who. Even if your business is prepared, it may be that a supplier down the line has failed to comply with new regulations, or is attempting to use a supply chain that no longer exists.
5. Review all your international contracts
Your current contracts with suppliers will have no provisions for who would be responsible for shipping goods across a new border.
Many businesses will have hundreds, if not thousands of such contracts – which may all need to be renegotiated to decide who shoulders the burden of getting goods through customs.
6. Boost your cash flow
Brexit means VAT will probably be charged at the EU border. That means you’re going to need more cash reserves available to pay that tax, hold reserves of stock, and prepare in case your goods are delayed on the crossing.
Demand for warehouse space has already skyrocketed, as businesses prepare to hold extra stock in case of supply disruption.
7. Develop a contingency plan
Changes to customs regulations are often disruptive. Australia’s borders ground to a halt in 2005, after a major procedural change.
Dover in the UK will be a potential bottleneck, as thousands of companies attempt to get their goods to pass the new standards.
That means you need a plan ready in case it becomes impossible to get goods and services across the border in the Brexit aftermath.
8. Know your employees’ nationalities
Though the eventual Brexit legislation should safeguard EU citizens' working rights in the UK, you will still need to check you are employing your EU workers legally, and that their contracts cover their post-Brexit status.
9. Intellectual property
Many current copyrights are safeguarded under EU law, and will need to be updated after Brexit. So your brand design or product patents may need to be re-patented, depending on the deal struck.
Theresa May's government has yet to develop a plan for maintaining copyrights, so it's important to keep your ear to the ground on this one, especially if you have a valuable IP.